Investment Trust Discounts – Update re Rockwood Realisation and implications

More than 95% of shareholders voted for proposed changes in the investment strategy to take place as opposed to a wind-up of the trust, despite Gresham House calling for a managed two-year wind-down of the vehicle and for the initial return of capital via a B share scheme at the end of last year.

This is a long running saga that has been mentioned in various blogs in the past. Links to these are below.

Should other investment trusts follow this example?

Any investment trust with a discount will need to look seriously at this case study.

Cliff Weight’s 17 October 2020 blog highlighted a range of ways to reduce the discount. Tender offers are not the only way, but appear to be a powerful tool in the armoury. A combination of shareholder pressure and an enlightened board willing to embrace new ideas may be the best approach.

Conclusion

The SEC/Rockwood Realisation case study is a good example of what shareholders can do, if they engage pro-actively with management who are also willing to engage. There have been shareholder resolutions and various parties have put their views forward strongly. The progress so far looks positive, but time will tell.